Hemas to exit power biz in Rs.1.68bn deal

This is an important move for us given the change in the group’s strategic direction to realign its portfolio to focus on its core strengths of wellness, leisure and mobility

emas Holdings PLC yesterday said it had entered into a share sale and purchase agreement to fully divest its shareholding in Hemas Power PLC to a consortium of buyers, consisting of NDB Capital Holdings PLC, ACL Cables PLC and Trydan Partners Private Ltd for a consideration of Rs.1.68 billion—Rs.17.90 per share.

Hemas Holdings PLC represents 75 percent of the shareholding of Hemas Power, consisting of 93.9 million shares out of the 125.2 million ordinary shares of Hemas Power in issue.  Mirror Business exclusively reported on Hemas’ intentions to exit the power business on its June 17 issue.

The sale is subject to regulatory approval and fulfilment of certain conditions specified in the sale and share purchase agreement, including the sale of shares in Hemas Power’s thermal plant, Heladhanavi and changing the name of the company.

Hemas Power in a stock exchange filing yesterday said it divested its 50 percent interest in Heladhanavi to Lakdhanvi Ltd, the joint operator of the power plant, for a consideration of RS.531.7 million. The power purchase agreement of the 10MW thermal plant with Ceylon Electricity Board is scheduled to expire this December.   

The government appears to have taken a decision not to renew the power purchase agreement with private thermal power producers amid concerns of relatively higher prices paid per unit.

“This is an important move for us given the change in the group’s strategic direction to realign its portfolio to focus on its core strengths of wellness, leisure and mobility. The consortium of buyers was chosen after a rigorous process of evaluation by the board of directors of Hemas Holdings PLC. We wish the consortium every success going forward,” Hemas group CEO Steven Enderby said.

Hemas entered the power sector with its investment in a 100MW thermal power plant Heladhanavi in 2003.

With its investment in the 2MW Giddawa hydro power plant in 2006, Hemas entered the renewable energy segment by adding on two more plants in Agra Oya (2.6MW) and Magal Ganga (2.4) taking the capacity up to 7MW.

The company was listed in October 2009, issuing 31.3 million shares at Rs.20 per share, through a book-building process, with the intention of building its presence in renewable energy space.

In 2013, Hemas Power invested in a 29.3 percent stake of Pan Asian Power PLC, including a portfolio of two hydro power plants with a total capacity of 4.4MW.

Despite the higher revenue of Rs.6.5 billion, Hemas Power reported an after-tax loss of Rs.259 million in FY13/14, impacted by Rs.576 million impairment as the company had estimated the recoverable value of its thermal assets to fall short of their carrying value. For the first quarter ended June 30, 2014, Hemas Power reported a net loss of Rs.68.8 million with revenue falling 45 percent year-on-year to Rs.94.3 million.

The group net asset value as of the same date was Rs.19.52. The total assets were Rs.3.57 billion.

The June balance sheet reported retained earnings of Rs.664.4 million. Under current liabilities, interest bearing loans and borrowings stood at Rs.152.1 million.
Hemas Holdings PLC is a diversified conglomerate with a focus on four key sectors namely; healthcare, fast moving consumer goods, transportation and leisure.